Generally accepted accounting principles (
GAAP) are the standard framework of guidelines for
financial accounting used in any given jurisdiction; generally known as
accounting standards or
standard accounting practice. These include the standards, conventions, and rules that
accountants follow in recording and summarizing and in the preparation of
financial statements. Many businesses choose to "opt out" of GAAP practices as they operate on a
cash basis, as opposed to an
accrual basis. A comparison would be the way that most people balance their checkbook when a check is written, its amount is deducted from the total balance even though the funds have not yet left the account. Financial decisions made after the check is written are based on the balance after the check is deducted.